Our national ticking time bomb | Opinion

By Bill Yeargin

Special to the Sun Sentinel|

Sep 12, 2019 | 8:06 AM

The national debt clock never anticipated 14 digits. In this 2008 photo, it shows a makeshift “1" in the dollar sign box. Since then, the debt has more than doubled — to $22.5 trillion. And it’s putting our country in danger.

The U.S. has a big problem that, if not corrected soon, will have a significant negative impact on our country, including Florida. Our growing national debt has resulted in a debt-to-GDP ratio that is over 100 percent, one of the world’s worst.

In retrospect, it is hard to believe in the late 90s, the U.S. was running budget surpluses and on track to have no national debt by 2006. Now, we have a national debt approaching $23 trillion dollars -- about $68,000 per citizen -- and it’s still growing fast. The past two years the federal deficit has exploded to over a trillion dollars a year (yep, a trillion.) It is endangering our country and state’s future. We need our leaders to deal with this problem now.

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So, how did we get here?

After World War 2, the U.S. had a huge national debt, but a growing economy and fiscal discipline (at least more than we have now) reduced it to manageable levels. By the late 90s, the president and Congress had worked

Bill Yeargin is CEO of Correct Craft, a boat building business based in Orlando. He's also on the board of the University of Central Florida. (Courtesy)

to generate national surpluses and were heading toward a debt-free U.S. Then, in the early 2000s, the combination of tax cuts, increased Medicare benefits for the elderly, and waging two wars on a credit card resulted in the return of national deficits and we lost our opportunity to be debt-free. The financial crisis in 2008 resulted in huge government spending to avert a depression. After we got through the Great Recession, our deficit was high but dropping. The past three years has seen increased spending and tax cuts, which have exploded the annual deficit to over $1 trillion.

At some point investors will become concerned about lending to a debt-riddled U.S., which will result in having to offer higher interest rates to attract the money. Even with rates low today, interest expense is the federal government’s third highest expenditure following the elderly and military. The U.S. already borrows all the money it uses to pay its interest expense, sort of like a Ponzi scheme. Lack of investor confidence will only make this problem worse.

Additionally, we have lost two of our most powerful tools to pull out of a future recession. From Economics 101, recall that deficit spending and low interest rates are tools used to end a recession. But we are now using them in a good economy, which is sort of like eating your seed corn.

So, why do we accept this?

It feels good to spend. Just like anyone who borrows to buy something they cannot afford, the U.S. finds it to easy to use its credit card (deficit spending). In the short run, this spending makes politicians look like geniuses because it fuels the economy and drives votes. In the long run, the politicians will be out of office when the problems occur. When the economy is doing well -- even when artificially propped up with huge deficit spending -- people feel like things are going well and don’t worry about those huge credit card bills (national debt) piling up.

We need leaders who have the will, character and courage to tackle this problem like any business leader would for their organization. If we want low taxes, then we must decide how to cut expenses. The challenge with federal expenses is that most of the money goes to the elderly, through Social Security and Medicare, and the military. And there are people who will not even consider a change in those areas. The items that people get emotional about -- inefficiencies, foreign aid, food stamps, income security -- don’t add up enough to fix the problem.

Until we are willing to tackle these tough decisions, we stay on a very dangerous path. We must decide what we want to spend money on and how much tax revenue we need to support that spending. It’s tough, but that’s what great leaders do - tackle tough problems. I encourage our leaders to tackle this problem today.

Bill Yeargin is CEO of Correct Craft, a boat building business based in Orlando. He’s also on the board of the University of Central Florida.